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It costs a company significantly more to find a new client than it does to keep an existing client happy, but sometimes that’s not easy to do, especially when a company failure disappoints your client base.
This is exactly what happened to JPMorgan Chase when the company was hit with five SEC enforcement actions due to misleading disclosures and other violations. The financial services giant will likely end up paying $151 million in penalties and voluntary transactions to investors to settle. But that may not be the most expensive part.
The company will likely lose clients in the short term and the damage to its reputation could have long-term consequences.
The truth is, any company can find themselves in a similar situation. How they deal with it will determine the extent of the damage and the time it will take them to rebuild their client list.
Here are some ideas for facing this challenging situation.
It couldn’t happen to me!
It’s human nature to assume that the misfortunes that visit others won’t also come to see us. That kind of thinking is not a luxury that a risk outsourcing firm like ours can enjoy. We have to plan for the worst case and mitigate every possible risk.
But some risks can’t be completely mitigated. We saw that recently when back-to-back hurricanes slammed into Florida.
It’s easy to look at a problem like the one JPMorgan Chase has and assume that our firm could never find itself in a similar situation, but this isn’t the first time a major financial services company has faced such a challenge.
In 2016, Wells Fargo faced a major crisis when it was revealed that employees had created millions of unauthorized accounts for customers. It led to the bank losing over 5,000 employees, its CEO, and several board members. While the bank's reputation suffered significantly, the firm has made efforts to regain customer trust through increased transparency and improved practices, after settling for $3 billion.
In 2020, Goldman Sachs agreed to pay nearly $3 billion to resolve investigations into its role in the 1MDB corruption scandal. Afterward, it took steps to strengthen compliance procedures and internal controls and increased transparency in dealings with sovereign entities. The result was that the company’s work to rebuild its reputation demonstrated a commitment to improved governance and ethical practices.
When bad things happen to good companies, clients leave, but it doesn’t have to be that way.
Doubling Down on Effective Outreach for Crisis Control
A proactive and strategic communication approach is required. This is challenging. After a significant failure, customers are sure to be upset and may be unwilling to connect through traditional channels.
The response must be immediate and transparent. In some industries, regulators have defined the required response and its timing. Customers want to know what happened, what the company is or has done about it and how the event will impact them.
Paradoxically, customers may be unwilling to accept this information from the only party who can answer their questions. This means the company has to employ creative methods to get their attention, including interactive webinars, augmented reality experiences, or knocking on their doors with an information packet.
By implementing these strategies, companies can not only regain customer attention after a significant failure but also transform the crisis into an opportunity to strengthen relationships and demonstrate their commitment to customer satisfaction. The key is to maintain consistent, transparent, and personalized communication while taking concrete actions to address the root causes of the failure.
Whether something like this has recently happened to you or your team is preparing a plan for dealing with this eventuality, NCCI Services is here to help. Our professional team of field services personnel can hand deliver your message to the customers that matter most at a surprisingly affordable price. Reach out to us today to find out how.
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